What is “mortgage insurance?” Mortgage insurance is a premium that is charge, upfront or monthly, that covers the cost of foreclosures.
top What is an Adjustable Rate Mortgages? Adjustable Rate Mortgages (“ARM”) differ from fixed rate mortgage in that the interest rate changes (adjust) at a fixed time. A one-year mortgage adjusts once a year and a six month mortgage adjust every six months. There are one month, six month and one, three, five seven and ten year adjustable mortgages, to name a few. When the interest rate changes, it is usually tied to an index, such at the one-year treasury or Libor Index. Your new rate would be the index plus the margin, which is the profit to the investor, usually around 2.75% and it is normally subject to maximum and minimum interest rate changes. Your lender should have a disclosure that needs to be signed by you that explains how the program works. ARM’s are generally a good idea if you think rates are going to stay low, you have the tolerance for upward rate movement or you do not intend to stay in the property longer.
Related Questions
- What is "mortgage insurance?" Mortgage insurance is a premium that is charge, upfront or monthly, that covers the cost of foreclosures.
- Under FHAs Risk-based premium structure, what is the range of upfront mortgage insurance premiums that you will charge?
- Is the upfront mortgage insurance premium negotiable?
